Assistance For Single Parents To Buy A Home! How Does The Governments New Family Home Guarantee Work
From July 1st this year, a new Government scheme will launch to assist single-parent families in purchasing a home. Again Just like the First Home Loan Deposit scheme, numbers to this opportunity will be capped at 10000 spaces, so it will be a case of first in, best dressed.
What does it mean for single-parent families, though? Well, it is good news, really. Usually, families that have gone through breakups have gone through expensive separations, and they no longer have the savings to be able to put a deposit down on a new house. Only having one income-earning parent in the home often means that saving for another deposit is almost impossible. This means that these families are often stuck in the rent cycle. And while the equivalent rent they are paying could probably service a home loan, it is the saving of a deposit that shuts most out of getting another home.
Enter the new Family Home Guarantee being launched. This is a scheme where the government will guarantee the new home buyers by standing in as a guarantor.The eligible applicant will need to have saved a 2% deposit towards the home that they would like to buy, and the government will stand in for the further 18% the applicant would need as a guarantee. The government does not physically put down any money and the new applicant would still need to loan the further 98% of the purchase price, but it is far better than having to save and put down 20% to avoid Lenders Mortgage Insurance costs. Prospective clients will still need to also come up with a further 5% stamp duties here in South Australia ( that is at the time of writing this article, but this may change). Basically, it is like having a rich uncle come in and use his home to guarantee the deposit for yours.
Unlike the First Home Loan Deposit Scheme, where the applicants have to be first home buyers, the Family guarantee does not have this requirement, which allows families to get back into the property market.
Some of the other criteria, but not all are as follows..
- The home has to be used for owner-occupied purposes.
- Applicants must not own another home.
- The home can not be worth more than $500000.00 In metropolitan Adelaide and more than $350000.00 in regional South Australia.
- Only available to Australian Citizens
- Must Be a single parent with at least one dependent
- The Single parent must not have an income of more than $125000.00 for the previous financial year.
- It is expected that the single parent demonstrates that they are the natural or adoptive parent of a dependent child.
There are more rules, and you can read about themhere.
All the information is not out on this yet, and I would encourage you to talk to your local Mortgage broker to find out more as it develops, for most brokers are keeping a close eye on this and getting updates as they are available. So if this is something that could work for you, I would encourage you to reach out. Castle Mortgages is a firm of local Mortgage brokers servicing Adelaide.
There are a limited number of lenders that have applied to be a part of this scheme, and each has different criteria that will need to be met on top of the criteria the government sets out. As we get closer to July 1st they will start letting brokers know what will be required. A good mortgage broker will assist you in navigating the different options available out there and help narrow down what might suit you, and they will also help you navigate the myriad of paperwork that is required to be done.
If you have any further questions or think this is a scheme you would like to explore, why not get in touch today.